Notes, summaries, assignments, exams, and problems for Economy

Equity

Equity is the residual interest in the assets of a company after deducting all its liabilities. It represents the financing resources that are not borrowings.

Components of Equity:

• All contributions made by owners
• Reserves, share premiums & equity instruments
• Retained earnings, prior losses & profit/loss of the period
• Grants, subsidies, donations, and bequests received
• Valuation adjustments & hedging transactions

The Balance Sheet: A Fundamental Accounting Identity

The Balance Sheet represents the fundamental accounting equation:

USES OF FUNDS = SOURCES OF FUNDS

This equation highlights that a company's assets (uses of funds) are financed by either its liabilities or equity (sources of funds).

Static vs. Dynamic Vision of Financial Statements

While... Continue reading "Understanding Equity, Financial Statements, and Accounting Principles" »

Marketing Plan Essentials

Defining Your Approach

A marketing plan outlines key elements for reaching your target audience and achieving business goals. It encompasses:

• Customer Awareness: Making potential customers aware of your brand and offerings.
• Messaging: Crafting the right message to resonate with your audience.
• Delivery Methods: Choosing the most effective channels to deliver your message.
• Sales Generation: Converting awareness and interest into actual sales.

Identifying Marketing Vehicles

When developing your strategy, consider various marketing vehicles such as:

• Brochures
• Websites
• Networking events
• Social media platforms
• Advertising campaigns

Leveraging Social Media

To effectively utilize social media, businesses should:

• Create engaging content about

The Impact of Declining Oil Prices on the Global Economy

The most relevant issue in recent economic news is the spectacular decline in petroleum prices over the past several months, with its economic value falling by 46% since last June.

Nowadays, petroleum is considered the most important energy source, leading many countries to base their economies on petroleum and its byproducts. Therefore, it is widely known as 'black gold'.

Global Demand and Price Fluctuations

In July 2014, the International Energy Agency (IEA) predicted that worldwide demand would increase by 1.4 million barrels per day (bpd) in 2015. However, these projections were revised three months later. Demand growth was lower than expected due to slower global economic growth and... Continue reading "Oil Price Decline: Economic Impact and Market Dynamics" »

Chapter 3

1- Define The marketing environment? Includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers.

2- Define Micro environment?

A microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

1. The Company: In designing marketing plans, marketing management takes other company groups into account. These interrelated groups form the internal environment.
2. Suppliers: Are those firms and individuals that provide resources needed by the company and its competitors to produce goods and services. Suppliers provide

Improvement methods:

1. Lean manufacturing is a system for maximizing product value. Six Sigma is a problem-solving methodology that uses its collection of tools to fix a specific project over a specific time period. All Six Sigma’s resources are targeted on this one project until the problem is fixed. While Lean Manufacturing encourages daily, general improvements, Six Sigma demands data-based, specific improvements for specific projects.

Six sigma:

Set of techniques and tools for process improvement. Their strategies seek to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes.

The 6 Sigma method thus poses as a fundamental principle:... Continue reading "Lean Manufacturing and Six Sigma: Methods for Quality Improvement" »

SMALL BUSINESS:Any independently owned and operated business that is not dominant in its competitive área.

SHARING ECONOMY

• An economic model involving the sharing of underutilized resources 

•  Entrepreneurs earn income by renting out an underutilized resource such as lodging or vehicles 

•  Uber is an example 

•  Referred to as the “gig economy” 

• Are workers independent contractors or employees? 

EQUITY FINANCING:Referred to as equity financing because the owner uses real personal assets rather than borrowing funds from outside sources to get started in a new business.

Can also obtain equity financing by finding investors for their operations and selling stock in the business to family members, friends, employees or other investors.

VENTURE

Arable farming

Concept of the economic activity: Jobs done by people to satisfy society's needs and for wealth.

• Production
  • Types of goods depending on production
  • Intermediate goods
  • Provision of services
• Delivery and state of goods and services

Distribution

• Two steps in sale:
• Wholesale
• Retail

Consume

Concept: Use of a good or service to satisfy your own needs.

• Two types of goods depending on consumption:
• Durable
• Non-durable

Factors Affecting Production

• Human capital: Employees and business men
• Capital
  • Physical capital: Machinery, furniture, and raw materials
  • Financial capital: Money necessary to begin production
• Resources used to produce goods and services

The Market Economy

Number of products available depends on:

• Inflation
  • What causes it?
  • General rise of prices in

Consumer Optimization

The budget constraint (BC) is defined as: P₁X₁ + P₂X₂ = M, where the slope is -P₁/P₂ = dX₂/dX₁. The consumer optimizes consumption decisions by reaching the highest satisfaction level given their resources. Any point on the BC other than the equilibrium is non-optimal, as it won't be on the highest indifference curve.

The Marginal Rate of Substitution (MRS) is -MU₁/MU₂, representing the slope of the indifference curve.

Firm Optimization

Profit Maximization

Profit = Py - w

Profit maximization occurs when marginal revenue (MR) equals marginal cost (MC).

• When MC = MR, the firm achieves maximum efficiency.
• When MC < MR, the firm is inefficient and should increase production.
• When MC > MR, the firm is inefficient and should reduce

Unemployment Types and Dynamics

Unemployment is a multifaceted economic phenomenon, categorized into several distinct types based on its underlying causes.

Frictional Unemployment

Frictional unemployment arises because both workers and firms need time to locate each other and to digest the information about the value of a potential job match. It is a natural part of a dynamic labor market.

Structural Unemployment

Structural unemployment occurs if the skills or characteristics of persons looking for work do not "fit" the jobs available. This mismatch can be due to technological changes, shifts in industry, or geographical immobility.

Cyclical Unemployment

Cyclical unemployment arises because the economy has moved into a recession. During such periods,... Continue reading "Labor Market Concepts: Unemployment, Wages, and Discrimination" »